China Copper Imports Gain as Local Prices Strengthen

By Bloomberg News

Dec. 22 (Bloomberg) -- Refined copper imports by China, the world’s largest consumer, rebounded in November from an 11-month low as domestic prices strengthened on rising demand.

Shipments increased to 194,388 metric tons last month, the customs office said today. That’s 15 percent more than October’s level, which was the lowest since December 2008, according to data compiled by Bloomberg.

Copper reached the highest price since September 2008 this month as manufacturing in China expanded at the fastest pace in five years. The country is targeting 8 percent growth in 2010 and an 11 percent gain in industrial production, industry minister Li Yizhong said yesterday.

“Domestic prices have strengthened noticeably against London, narrowing losses on imports,” Fu Bin, an analyst at Jinrui Futures Co. said from Shenzhen. “We may see profits again if the trend continues.”

Copper for delivery in three months on the London Metal Exchange fell 0.6 percent to $6,895 a ton by 3:21 p.m. in Shanghai. It reached $7,170 on Dec. 2, the highest in almost 15 months. Shanghai copper was down as much as 0.8 percent to 55,260 yuan ($8,092) a ton.

Break Even

Buying the metal from overseas to sell in the Chinese market almost breaks even after accounting for China’s 17 percent value added tax, according to Bloomberg calculations.

“The chance is big that some 200,000 ton copper stocks may be released from bonded zones and drag down Chinese prices,” Fu said. “Traders will expedite imports before that happens.” A bonded zone holds imported goods before duty has been paid.

China may increase imports to as much as 200,000 metric tons a month in the first quarter of 2010 after higher domestic prices made purchases from overseas cheaper, according to Macquarie Group Ltd.

Copper in Shanghai last week was at the biggest premium to the London Metal Exchange price since mid-July, Macquarie analysts led by London-based Jim Lennon wrote in a report dated yesterday. More construction and car production in the Asian nation will boost demand for metals, they said.

“While the arbitrage may only be temporary, the incentive to import is consistent with our view that Chinese copper demand is booming,” they said. “The strength in Chinese prices comes despite consumers reportedly doing everything they can to avoid buying and despite estimations of stock build by some commentators well in excess of one million tons this year.”

China’s 11-month refined copper purchases more than doubled to 2.9 million tons, customs said today. November exports declined 42 percent from a 14-month high the previous month to 10,824 tons, its data showed.

--Li Xiaowei. With assistance by Chanyaporn Chanjaroen in London. Editors: Richard Dobson, Ravil Shirodkar.

To contact the Bloomberg News staff on this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net